Written by The Banking Post
Oil prices declined in Asian trading on Monday, extending last week’s drop of more than 4 percent, as investors awaited the outcome of talks between the US and Russia on the war in Ukraine scheduled later this week.
Brent crude futures fell 62 cents, or 0.93 percent, to $65.97 per barrel by 0631 GMT. Meanwhile, US West Texas Intermediate (WTI) crude futures dropped 69 cents, or 1.08 percent, to $63.19, according to Reuters.
Expectations have grown for a potential easing of sanctions that have restricted Russian oil supplies to international markets, following US President Donald Trump’s announcement on Friday that he would meet Russian President Vladimir Putin on August 15 in Alaska to negotiate an end to the conflict.
These talks come amid heightened US pressure on Russia, with the possibility that sanctions on Moscow could be intensified if no peace deal is reached.
“If peace talks falter and the conflict continues, the market could quickly shift to a bullish stance, potentially sparking a sharp rally in oil prices,” said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet.
Trump set a deadline of last Friday for Russia to agree to peace; otherwise, its oil buyers risk secondary sanctions. Simultaneously, Washington is urging India to reduce its purchases of Russian oil.
Consultancy Energy Aspects estimates Indian refiners have already bought 5 million barrels of WTI crude for August delivery, with an additional 5 million barrels possible depending on tender results, plus another 5 million barrels for September shipments.
The arbitrage opportunity for WTI crude to Asia remains open, and India is expected to continue absorbing US crude for the time being, Energy Aspects noted.
Trump’s new higher tariffs on imports from dozens of countries, effective from Thursday, are expected to dampen economic activity by disrupting supply chains and fueling inflation.
Due to the gloomy economic outlook, Brent crude fell 4.4 percent, and WTI dropped 5.1 percent over the week ending Friday.
“The near-term price direction will depend on several critical events, including the August 15 meeting between the US and Russian presidents, upcoming Federal Reserve speeches, and the release of US Consumer Price Index data,” added Sachdeva.
